Aditya Shah of Hercules Advisors believes the most compelling opportunities within the infrastructure sector lie in engineering, procurement and construction (EPC) companies that are backed by strong order books. Speaking to ET Now, Shah emphasized that "EPC constructors where the order book is really very strong, that is where the real gist is." He highlighted Ahluwalia Contracts and PSP Projects as key infrastructure opportunities, noting that PSP Projects' order book has doubled over the last one year due to orders from Adani. Shah also remains constructive on established players like L&T, despite their premium valuations, stating these companies will continue to perform well in the infrastructure space. As reported by The Economic Times, Shah highlighted that "From my perspective, EPC contractors, road contractors or L&T will also continue to do well and, mind you, the stock is not really cheap."
Shah remains constructive on the IT sector, arguing that much of the pessimism surrounding the industry has already been priced in by the market. Speaking to ET Now, Shah stated that "a lot on the IT sector has been done. The sector could stay here for a while, so from my perspective it is one of the top picks." He highlighted TCS and HCL Tech as top picks due to their strong dividend yields, despite AI-related growth concerns. Shah believes the sector could remain stable for a while, with IT companies' growth slowing but remaining attractive for dividend-focused investors. As reported by The Economic Times, he noted that "Companies like TCS or HCL Tech continue to give a strong dividend yield. Despite the AI burst, the growth for IT companies will slow down, so that continues to be one of my top picks."
Shah highlighted ITC as an attractive opportunity after the stock reached two- to three-year lows due to cigarette taxation impacts. Speaking to ET Now, Shah noted that "ITC is at a two- to three-year low. ITC has lost a lot of returns this year due to a lot of taxation that has happened on cigarettes. But from my perspective, it is coming into an area where the dividend yield continues to look really very strong and, on top of it, the business on the consumer side looks decent enough." He also expressed optimism about India's cell manufacturing opportunity, though he remains cautious on execution challenges, particularly customer support issues at companies like Ola Electric. According to The Economic Times, Shah acknowledged the conflicting signals from Ola Electric, stating "Truly, it is a very confusing state. On one hand, the deliveries are increasing and on the other hand, customers are really complaining about how the after-sales services are being handled."
Shah expressed concerns about India's capital expenditure cycle slowing down amid rising geopolitical uncertainties and commodity price pressures. Speaking to ET Now, Shah emphasized that "The capex story is only a narrative. I think the capex cycle is entirely slowing down." He noted that prolonged geopolitical tensions and rising fuel costs could weigh on economic growth, creating potential market correction opportunities. Shah stressed that "Every segment of the economy will start to face a slowdown as this war continues to aggravate, as prices of every commodity increase and as fuel costs rise." However, he views any resulting market correction as an opportunity for long-term investors, stating "Growth will slow down and at the same time valuations will also take a beating, and that is a good time to invest in the economy." Despite avoiding the metals sector, Shah prefers domestic growth themes including chemicals, infrastructure, banks, and financials, believing these sectors offer attractive opportunities if valuations become more reasonable.
Shah remains positive on InterGlobe Aviation, the parent company of IndiGo, despite several challenges faced by the airline industry. Speaking to ET Now, Shah believes "IndiGo will continue to face pressure all through this year, but IndiGo will gain even more market share as others continue to bleed even more." He highlighted the airline's dominant market position, noting that "Air India, mind you, has a loss of ₹26,000 crore. Similarly, for Akasa Air, they have a loss of about ₹4,500 crore." While positive on the long-term outlook, Shah believes investors should wait for better entry points, stating "The valuation still is too expensive to make an entry. Any correction through the year because of the losses that the company will post is an opportunity to buy."
